6 Things Nurses Aren’t Told Before They Retire

Retirement continues to be one of the most stressful transitions in an individual’s life. For most Americans, the idea of spending most of your career in one company and getting a pension is a thing of the past. Nurses, and other medical professionals, are often in a very special situation. 

Nurses tend to spend their entire career in one or two medical facilities. More often than not, they have a 401k/403b retirement savings account and a pension. Pair those benefits with Social Security and you have a foundation for a healthy retirement. Though it looks good at first glance, many nurses are still entering retirement uninformed. What nurses (and medical professionals) are not being told can cause them to leave hundreds of thousands of dollars on the table. 

Chris Bulman and his fiduciary team at Bulman Wealth specialize in creating retirement plans for nurses and other medical professionals. The following is a list of some of the most common mistakes nurses make in their retirement, based on the experience Bulman and his team, and what to do about it. 

Consider Working With A Fiduciary 

Who you work with can have a tremendous effect on the outcome. For example, if you wanted to start to eat healthier, would you consult with your local butch or find a dietician? It may seem like a leading question at first glance, but let’s take a moment and breakdown why this analogy holds up. 

How you are licensed or who you work for can affect what investment options are presented. Would you go to a hardware store that only sold hammers and nails? You can do a lot with hammers and nails, but you can’t do everything. Are you talking to someone who can only offer hammers? Are you asking for nutritional advice from a butcher? 

To make matters more complicated, Some butchers get dietician certifications so they can put on multiple hats. Even with multiple hats, they still tend to get paid more on selling you meat, which ultimately compromises their position. In 2017, Tony Robbins commented on this issue when he was interviewed about his book “Money”.  

When you are making big decisions, like what to do with your 401k/403b or when to file for Social Security, you increase your odds of success by working with someone who is not in a compromised position. Do not ask “are you a fiduciary”. That isn’t enough as all financial advisors technically have a fiduciary responsibility to some extent. Ask how they make their money. If you are looking for complete retirement planning, Bulman and his team encourage nurses (and others) to find and work with a true fiduciary. 

Consider Organizing Your Retirement Into A Plan You Understand

There is an almost endless sea of knowledge and opinions about what to do with your finances when you retire. Information is useless unless you understand how to apply it. Bulman and his team of fiduciaries recommend that whoever you work with is able to provide you a plan that you can understand.

You don’t need a financial degree to understand a plan. A plan is nothing more that a deliberate and structured system that is built to take you all the way through retirement without running out of money. Life happens, adjustments will need to be made, but you have direction with a clear baseline.

A plan can offer a series of scenarios which can help give a nurse (or a retiree) context and expectations. Adjustments along the way are inevitable. If you decide to work with a fiduciary, you will probably be able to run different scenarios so you can plan for the good, the bad, and the ugly. To plan is to protect what you have built and project solutions to live how you want in retirement. 

Consider Optimizing Your Social Security 

Whether you decide to put a plan together or not, Social Security is often a major point of conversation. WIth over 500 ways you can file for Social Security, it can feel overwhelming on what to do. In addition, how you file can make a six figure difference in your retirement. How can you tell which option is right for you? 

First, start by considering longevity. If you believe you won’t make it to 80 years old, you may want to consider filing on the early side. If you have longevity, you may consider delaying your file date as it will provide you more money overall. 

If you take your Social Security earlier, it can lead to more assets in your estate to be passed to your kin. If you take Social Security later, it can lead to more income in retirement. There is no silver bullet. Filing for Social Security must be based on your wants and needs. 

Consider Rolling Over Your 401k or 403b

A 401k or a 403b are essentially IRAs that have limited investment options and are restricted by the employer. If you were to transfer from one hospital to another, your old 401k/403b can be transferred into an IRA without a penalty and may be able to offer you more investment options.

Too often, we have found that nurses are told or suggested to keep all their assets in one egg until their retirement. Though there is an inherent benefit to simplicity, Bulman and his team would suggest that the restrictions could make the single nest egg not worth it. 

Before you retire, it is encouraged to take inventory of what you have, locate where it currently is invested, and explore all the options that are available for those funds. Assuming you are with a fiduciary, you may be surprised at some of the options that are available to you right now.  

Consider Adjusting Your Risk As You Approach Retirement 

Nurses are known for being good stewards of their savings and investments. It is common to find a significant amount of assets in a 401k or a 403b at or before retirement. Too often, unbeknownst to them, all of those assets are 100% at risk. The typical answer Bulman and his team hear is “I didn’t know” or “No one told me how much risk I had”. 

As a general rule, it is recommended that the older you get, the less risk you should take. There are many different ways you can adjust your risk to be more suited to you, your age and your investment intentions. 

Consider Comparing The Pension With The Lump Sum

The pension is a rare bird these days when it comes to retirement planning. With its rarity comes confusion. At first glance, a pension can feel like a very comfortable option. It is essentially a guaranteed lifetime income stream. It comes at a cost, though. 

If you take the pension with 0% survivability, once you die, it becomes a dead asset that cannot transfer to anyone. If you take 100% survivability, you and your spouse will have income for life, but it is still a dead asset. You kids/beneficiaries will never see a dime. In addition, the hospital or clinic that offers the pension must stay in business for you to keep receiving the benefit. If they go belly up, so does your income. 

If you take the lump sum, the risk is on you to make sure the assets are invested and perform. When you die, any and all assets pass to your kids/beneficiary. 

The pension vs lump sum conversation is one of the most important conversations Bulman and his team have with their nurse clients. Either option is good. It all boils down to what you want. When you have this conversation, it is a good idea to have it with a fiduciary. 

In Conclusion 

Nurses and medical professionals are some of the few professions that still offer 401ks/403bs with pensions and have high rates of career retention. This makes their retirement planning extremely unique in that there are different questions that must be asked as opposed to your average American preparing for retirement. Bulman and his team highly encourage that you find and work with a fiduciary that can put a plan together that organizes your 401k/403b, Social Security, and pension while adjusting your risk to an appropriate level.